Hub Group, Inc. (HUBG) Tops Q4 EPS by 1c, Revenues Miss; Offers FY20 EPS Guidance Above Consensus

Hub Group, Inc. (NASDAQ: HUBG) reported Q4 EPS of $0.84, $0.01 better than the analyst estimate of $0.83. Revenue for the quarter came in at $901 million versus the consensus estimate of $931.08 million.

Highlights:

• Profit improvement initiatives and the resiliency of our diversified model resulted in net income of $28.0 million or $0.84 in diluted earnings per share in the fourth quarter and are expected to provide for long term earnings growth
• Management estimates 2020 diluted EPS will range from $3.39 to $3.60 as we anticipate we will continue to benefit from internal initiatives in a challenging freight environment
• Strong cost controls resulted in a 4.3% operating margin and EBITDA of $69 million for the fourth quarter
• Net cash provided by operating activities for 2019 was $254.5 million
• Full year 2019 net income was $107 million. Full year 2019 EBITDA was $269 million, a 29% increase over last year and free cash flow (non-GAAP) for the year was $170 million compared to $22 million in 2018

Update on Profit Improvement Initiatives

“We remain focused on executing our strategy, key tenets of which include delivering a superior experience for both our customers and employees, diversifying our service offerings and investing in technology while increasing profitability and our return on invested capital. Last quarter we announced profit improvement initiatives focused on operational enhancements, technology driven automation, revenue management, and procurement savings in transportation and general and administrative costs. We continue to execute on these important initiatives that position Hub for success despite the challenging freight environment,” said Dave Yeager, Hub’s Chairman and Chief Executive Officer.

GUIDANCE:

Hub Group, Inc. sees FY2020 EPS of $3.39-$3.60, versus the consensus of $3.36.

We expect that our 2020 diluted earnings per share will range from $3.39 to $3.60. We estimate low- to mid-single digit percentage revenue growth for the full year. We expect gross margin as a percentage of revenue to range from 13.5% to 13.9% for the year. We estimate our quarterly costs and expenses will range from $92 million to $94 million. We expect annual amortization expense associated with the CaseStack and Hub Group Dedicated acquisitions will be approximately $13.6 million and compensation expense related to restricted stock issued to CaseStack management in connection with the acquisition will be approximately $2.5 million in 2020. We project our effective tax rate for 2020 will range from 24% to 25%. We forecast we will spend between $115 million and $120 million on capital expenditures in 2020, including $35 million related to the construction of a new office building on our Oak Brook, IL campus.

For earnings history and earnings-related data on Hub Group, Inc. (HUBG) click here.

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